6 MACROECONOMICS

Biswa Swarup Misra

Labor Force Statistics

Produced by Bureau of Labor Statistics (BLS),
in the U.S. Dept. of Labor
Based on regular survey of 60,000 households
Based on adult population (16 yrs or older)

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Labor Force Statistics

BLS divides population into 3 groups:
employed: paid employees, self-employed,
and unpaid workers in a family business
unemployed: people not working who have looked
for work during previous 4 weeks
not in the labor force: everyone else

The labor force is the total # of workers, including

the employed and unemployed.

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Measuring the Unemployment Rate

and the Labor Force Participation Rate
The Household Survey

Labor force The sum of

employed and unemployed
workers in the economy.
Unemployment rate The
percentage of the labor force
that is unemployed.
Discouraged workers People who are
available for work but have not looked for a
job during the previous four weeks
because they believe no jobs are available
for them.
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Measuring the Unemployment Rate

and the Labor Force Participation Rate
The Household Survey

The Employment Status of the

Civilian Working-Age
Population, May 2008
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Measuring the Unemployment Rate

and the Labor Force Participation Rate
The Household Survey
The unemployment rate measures the percentage
of the labor force that is unemployed.

Number of unemployed
100 = Unemployment rate
Labor force

The labor force participation rate measures the

percentage of the working-age population in the
labor force.

Labor force
100 = Labor force participation rate
Working-age population
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Labor Force Statistics

Unemployment rate (u-rate):
% of the labor force that is unemployed

u-rate

# of unemployed
= 100 x
labor force

Labor force participation rate:

% of the adult population that is in the labor force

labor force
labor force
= 100 x
participation rate
adult population
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A C T I V E L E A R N I N G 1:

Calculate labor force statistics

Compute the labor force, u-rate, adult population,

and labor force participation rate using this data:
Adult population of the U.S.
by group, September 2014
# of employed

146.6 million

# of unemployed

9.2 million

not in labor force

92.5 million

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A C T I V E L E A R N I N G 1:

Answers

Labor force = employed + unemployed

= 146.6 + 9.2
= 155.8 million
U-rate

= 100 x (unemployed)/(labor force)

= 100 x 9.2/155.8
= 5.9%

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A C T I V E L E A R N I N G 1:

Answers

Population

= labor force + not in labor force

= 155.8+ 92.5
= 248.3

LF partic. rate = 100 x (labor force)/(population)

= 100 x 150.1/227.5
= 62.7%

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Labor Market Statistics for Different Groups

The BLS publishes these statistics for demographic

groups within the population.
These data reveal widely different labor market
experiences for different groups.

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Labor Market Statistics for Whites & Blacks,

January 2006

Adults (20 yrs & older)

u-rate

LF part. rate

White, male

3.6%

76.4%

White, female

3.7

59.7

Black, male

7.5

69.8

Black, female

8.1

64.4

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Labor Market Statistics for Whites & Blacks,

January 2006

Teens (16-19 yrs)

u-rate

LF part. rate

White

13.3

47.1

Black

31.4

30.9

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Labor Market Statistics for Other Groups,

January 2006

All ages
u-rate

LF part. rate

Asian

3.2

65.7

Hispanic

5.8

69.3

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Labor Market Statistics by Education Level,

January 2006

Adults (25 yrs & older)

u-rate

LF part. rate

less than h.s.

7.0%

46.0%

h.s. diploma

4.4

62.5

some college or
assoc degree

3.5

72.5

bachelors degree
or more

2.1

78.3

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LF Participation Rates by Sex, Since 1950

100
90
80

Men

70
60
50

Women

40
30
20
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
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A C T I V E L E A R N I N G 2:

Exercise

In each of the following, what happens to the u-rate? Does

the u-rate give an accurate impression of whats happening in
the labor market?
A. Sue lost her job, and begins looking for a new one.
B. Jon, a steelworker who has been out of work since his mill
closed last year, becomes discouraged and gives up looking for
work.
C. Sam, the sole earner in his family of 5, just lost his $80,000 job
as a research scientist. Immediately, he takes a part-time job at
McDonalds until he can find another job in his field.

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A C T I V E L E A R N I N G 2:

Answers

A. Sue lost her job, and begins looking for a new one.
u-rate rises
A rising u-rate gives the impression that the labor market is
worsening, and it is.

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A C T I V E L E A R N I N G 2:

Answers

B. Jon has been out of work since last year,

becomes discouraged, stops looking for work.
Discouraged workers
would like to work but have given up looking for jobs
classified as not in the labor force rather than unemployed

u-rate falls, because Jon is no longer counted as unemployed.

A falling u-rate gives the impression that the labor market is
improving, but it is not.

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A C T I V E L E A R N I N G 2:

Answers

C. Sam lost his $80,000 job, and takes a part-time job at

McDonalds until he finds a better one.
u-rate unchanged, because a person is employed whether they
work full or part time.
Things are worse, but the u-rate fails to show it.

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